The Colony Square project in Atascadero, which city leaders have long considered key to revitalizing the downtown, is finally starting construction after years of delay.
And while the underlying concept of the development remains intact, the project has changed significantly from its first proposal four years ago.
The $18 million project that broke ground this week will include a state-of-the-art movie theater complex and about 14,000 square feet of adjacent retail for restaurants, coffee and ice cream shops, wine bars and other businesses.
The building housing the theaters and retail businesses has been modified from a two-story structure that included office space on the second floor to a single-story building without office space and 10,000 square feet smaller than originally planned.
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At one time, in early discussions, county library officials and the developers had hoped to relocate the city’s library. But financial complications and a land-lease issue at the library’s current location on Morro Road prevented that move.
In 2005, the then-estimated $35 million Colony Square project was to include a movie theater complex, medical center, martial arts studio, doughnut shop, restaurants, 72 live-and-work units and 100,300 square feet of retail.
Developers Jim Harrison of Pismo Beach and Peter Hilf of Santa Barbara are now considering building apartments in place of the condominiums — another key change to the project.
They say the changes reflect the economic climate.
Harrison said that by 2007, banks were reluctant to lend for office space as the economy had started to decline and vacancy rates for already built spaces began to spike in Atascadero and elsewhere.
The collapse of the housing market also made it clear that residential development could no longer drive the value of the property, he said.
Aim to modernize
Harrison has owned the property since 1984 and has been working to modernize it since 2003.
“That was 25 years ago and a lot of things have changed,” Harrison said. “It was clear that the shopping center that was there was becoming obsolete.”
Harrison, who was joined by Hilf in 2006, said the original intent of the project was to revitalize a critical portion of Atascadero’s downtown by transforming what was once a park-and-shop plaza into a pedestrian-friendly development, anchored by a movie theater complex.
That plan hasn’t changed, he said.
What is different is the theaters’ operator. In July, a Southern California movie theater chain, Galaxy Theatres, signed a lease agreement to operate the 10-screen theater complex instead of Paso Robles-based businessman John Roush, who was initially expected to operate the multiplex.
“I’ve always had a vision of doing something beneficial for the town — to create a place for the community to gather and enjoy,” Harrison said. “You can see the improvements being made by the city in its streetscape projects and the Lewis Avenue Bridge — we need to do our part also.”
Money hard to get
Financing the project during the current economic climate was the most difficult hurdle, Harrison said.In July the developers secured a $9 million construction loan from local banks including Mission Community Bank, Santa Lucia Bank and Community West Bank.
The loan was secured only after the city pledged $1.5 million in redevelopment money as a financial guarantee to help kick-start the project — a move applauded by Atascadero residents and downtown business owners.
Both Harrison and Hilf are quick to admit that the long delays have been frustrating, but neither ever considered accepting a loss and walking away, they say.
“I have always been attracted to areas and places where one can feel you’ve made a difference,” Hilf said. “This seemed like a town with strip malls and one main street — it was missing a magnet. This project will be that magnet.”
Harrison said he is still happy with the project — despite setbacks — and plans to move forward with the next phase of building, including the apartments and more retail if there is a demand.
“The economy is going to be a continuing problem — not just for us — but for everyone in this business,” he said. “No one is sure what is going to happen down the road, and that financial uncertainty is affecting most people in the country. If the banks don’t lend and businesses can’t borrow — who knows what is going to happen?”